Nigeria on Monday signed a $3.1 billion deal with the local arm of Royal Dutch Shell to plug a funding gap in their joint venture projects, the country's state oil company NNPC said, Reuters reported.
Under the deal, Shell would cover a $1.3 billion shortfall in NNPC's share of the 2008 joint venture budget and provide an extra $1.8 billion loan to cover outstanding payments from 2006 and 2007, NNPC said in a statement.
The agreement is the third such deal in 10 days between Nigeria, the world's No. 8 oil producer, and its joint venture partners to address chronic funding shortfalls which have delayed projects and depressed output.
"The money will be used to finance their upstream joint venture projects," the statement said. It said the $1.8 billion loan would be used mostly to settle payments due to local contractors and suppliers.
Shell operates onshore and shallow water oilfields in Nigeria as part of a joint venture called SPDC. Long the biggest producer in Nigeria, it has been overtaken by ExxonMobil, which has a higher proportion of facilities offshore.
Nigeria signed a $2 billion funding deal with Exxon last Monday, days after striking a similar $1 billion agreement with French energy group Total.
NNPC hopes the deals will help Nigeria unlock significant shut-in output potential, helping the country meet or exceed its OPEC quota of 2.2 million bpd over the next year or two.
Such agreements are seen as only a short-term solution to funding shortfalls in Africa's top producer.
President Umaru Yar'Adua has been keen to bridge the funding gap in the oil industry through private sector financing since he took power a year ago.
Last month, Energy Minister Odein Ajumogobia said Nigeria planned to raise cash on international and local capital markets to help fund the joint venture projects and avoid future shortfalls.